BOE Head: Central Banks Provide Stability In FinTech Era

The governor of the Bank of England said he doesn’t think new financial technologies (FinTechs) will cause central banks to be obsolete.

While Mark Carney admitted that even though central banks won’t be “at the cutting edge of innovation,” they are necessary institutions that are paramount in making sure financial markets continue to be stable, CNBC reported.

“That’s not hubris,” he said. “The fact is that the financial system … is the most heavily regulated part of the economy. That’s for a reason, there are lots of ways it can go wrong.”

He cited advances in the field, like electronic payments in China that have made huge leaps in terms of people using the technology. He said that example in particular has helped to create “one of the larger shadow banking bubbles in the world today.”

He said that regulation is an important aspect of the field.

“Quite often a good idea leads to other issues which is why central banks and regulators have to be on top of them,” he said. “And it’s why we have to look at them as a whole.”

Carney also said that it’s important to have a “level playing field” so that it can be an environment that promotes new ideas.

Carney said he is open to Facebook’s Libra cryptocurrency, unlike officials in France and Germany, who have outright said they don’t want it to happen. He called the British payment system “slow and expensive” and said he would keep an “open mind but not an open door” when it came to the proposed cryptocurrency.

Other countries have been trying to move into the digital currency field, like China, which is reportedly working on a coin tied to the yuan. The Swiss National Bank is also looking into digital currencies. Sweden’s Riksbank is also looking into piloting a digital version of the Swedish krona, and the head of the bank called Libra an “incredibly important catalytic event.”